On May 7, Axalta (Axalta Coating Systems) released its Q1 2025 financial results. For Q1 2025, net sales decreased by 2.50% year-on-year to $1.262 billion, including a 2.7% headwind from foreign currency translation. The decline in net sales was primarily due to unfavorable foreign currency translation and a 1.5% drop in sales volume, partially offset by a 1.1% contribution from the acquisition of CoverFlexx Group completed in July 2024, as well as higher average selling prices and a favorable 0.6% product mix.
Net income grew 154% year-on-year to $99 million, with a net profit margin of 7.8%. The increase was mainly due to the $55 million charge recorded in the same period last year related to our 2024 transformation plan. Adjusted net income rose by $16 million year-on-year to $129 million, driven by lower operating and variable costs. Operating income was $176 million, up 45.45% year-on-year; adjusted EBITDA increased by 4% year-on-year to $270 million, with an adjusted EBITDA margin up 140 basis points to 21.4%. Diluted earnings per share grew by 150% to $0.45, while adjusted diluted earnings per share grew by 16% to $0.59.
Axalta CEO and President Chris Villavarayan commented: "Our Q1 adjusted EBITDA set a new record, adjusted diluted earnings per share grew by 16%, and we continued to accelerate performance in challenging global economic conditions. Our OneAxalta culture is driving continuous operational improvements, enabling the company to achieve long-term success in uncertain environments. We remain focused on executing our A Plan, driving operational excellence, and delivering superior solutions and services to our customers."
The High-Performance Coatings segment had net sales of $822 million in Q1 2025, a 3.1% year-on-year decrease. The decline was driven by a 2.4% drop in sales volume and a 2.3% unfavorable foreign currency translation due to the euro and Mexican peso fluctuations against the US dollar, partially offset by a 1.6% contribution from the acquisition of CoverFlexx. The net sales of refinish coatings decreased by 1.50% to $511 million, including a 3% unfavorable foreign currency impact. Organic net sales of refinish coatings decreased by 1%, while CoverFlexx contributed a 270 basis point increase. Industrial coatings net sales dropped by 5.60% to $311 million as positive pricing was offset by lower sales volume and unfavorable foreign currency translation effects.
The adjusted EBITDA for the High-Performance Coatings segment was $197 million, compared to $196 million in the same period last year, with adjusted EBITDA margins of 24.1% and 23.1%, respectively. Lower operating expenses and reduced variable costs drove the growth in adjusted EBITDA and adjusted EBITDA margin.
The Transportation Coatings segment had net sales of $440 million in Q1 2025, a 1.3% year-on-year decrease. The decline was primarily due to a 3.4% unfavorable foreign currency translation impact from the Mexican peso, Brazilian real, and euro fluctuations against the US dollar, which was partially offset by a 1.8% increase in average selling prices and favorable product mix and a 0.3% increase in sales volume. Light vehicle coatings net sales decreased by 0.80% to $340 million, as 2% organic growth was offset by 3% foreign currency translation headwind. Commercial vehicle coatings net sales decreased by 3.20% to $100 million due to lower sales volume in North America and Latin America for Class vehicle manufacturing. The price mix for the Transportation Coatings segment was positive, growing by 2% year-on-year.
The adjusted EBITDA for the Transportation Coatings segment was $73 million, compared to $63 million in the same period last year, with adjusted EBITDA margins of 16.5% and 14.2%, respectively. The growth in adjusted EBITDA and adjusted EBITDA margin for the segment was driven by favorable pricing, reduced variable costs, and lower operating expenses.
For Q1 2025, regional net sales were as follows:
Data shows that the Asia Pacific region grew rapidly by 8.59%, while North America and Latin America experienced declines in revenue.
The Asia Pacific region showed strong growth, driven by rapid expansion in the Chinese market. According to the quarterly report, sales to Chinese customers for the three months ending March 31, 2025, and March 31, 2024, accounted for approximately 12% and 10% of total net sales, respectively, amounting to $129.4 million (approximately ￥918.5 million) and $151.44 million (approximately ￥1.086 billion). Axalta's net sales in China for Q1 2025 grew by 17.03% year-on-year, and by 18.24% year-on-year in RMB.
The significant growth in Axalta's Chinese revenue for Q1 2025 was driven by the increased production and sales of vehicles in China, especially in the new energy vehicle sector. According to the data from the National Bureau of Statistics of China, from January to March 2025, China produced and sold 7.561 million and 7.47 million vehicles, respectively, representing year-on-year growth of 14.5% and 11.2%, with passenger vehicles accounting for 6.513 million and 6.419 million, respectively, showing growth of 16.1% and 12.9%. Commercial vehicle production and sales were 1.048 million and 1.051 million, respectively, with growth of 5.1% and 1.8%. The production and sales of new energy vehicles reached 3.182 million and 3.075 million, respectively, with year-on-year growth of 50.4% and 47.1%.
Axalta entered China in 1984, with businesses in automotive OEM coatings, automotive refinish coatings, powder coatings, insulating coatings, and other industrial coatings. Currently, Axalta has four wholly-owned factories in mainland China, located in Changchun, Shanghai Jiading, Shanghai Qingpu, and Anhui Hexian, as well as one Asia Pacific technology and R&D center, one global color development center, and four customer training centers. The company employs over 2,000 people in China.
The financial report shows that Axalta's sales to external customers in China accounted for 10%, 10%, 10%, and 11% of total sales from 2021 to 2024. Based on this ratio, Axalta's sales in China for 2024 were approximately $580.4 million, up 11.96% year-on-year. Converted to RMB, Axalta's sales in China for 2024 were ￥4.09 billion, also up 11.96% year-on-year. This data suggests that Axalta's sales revenue in China for 2024 reached a historical high.
According to the quarterly report, Axalta's cash provided by operating activities in Q1 2025 was $26 million, compared to $34 million in the same period last year. The decrease was mainly due to an increase in working capital, partially offset by higher earnings. Free cash flow for Q1 2025 was $14 million, compared to $15 million in the same period last year, primarily due to lower cash provided by operating activities and higher planned capital expenditures. As of March 31, 2025, and December 31, 2024, Axalta's cash and cash equivalents were $575 million and $593 million, respectively.
Axalta Coating Systems, formerly DuPont's high-performance coatings division, is a leading global supplier of liquid and powder coatings. The business is divided into two segments: High-Performance Coatings and Transportation Coatings, serving four end markets globally: Refinish, Industrial, Light Vehicle, and Commercial Vehicle. From 2017 to 2024, annual sales were as follows: $4.377 billion, $4.696 billion, $4.482 billion, $3.738 billion, $4.416 billion, $4.884 billion, $4.362 billion, $5.184 billion, and $5.276 billion. Axalta's overseas business accounted for approximately 65% of the group's total sales in 2024.
As of the end of 2024, Axalta had 44 production sites globally (including 2 joint venture-operated production sites), 4 major technology centers, 45 customer training centers, about 5,000 independent local distributors, and served about 93,000 body repair shops across over 140 countries and regions. Axalta employs approximately 12,800 team members globally, with 26% of the team located in the US and 74% in international regions.
